Investing in the future of your children early has never been more critical than today. The level of benefits under the statutory pension scheme in Germany is likely to fall even further in the future, and the German labour market is also facing significant changes due to the aging of its population. As a result, it’s vital to start investing money for your children as early as possible.
However, when it comes to money investments for children, financial profit is no longer the only important factor. The global climate crisis proves that we have to set the right course now to guarantee a secure and fair future for the next generations. Financial investments are one of the most robust tools to influence politics and business positively.
But if you want to invest in a better world for your children, there are a few things to consider. For example, if you have money to invest for your children, a highly diversified investment strategy is fundamental, as is having a long-term mindset.
In this guide, we’ll explain how you can invest in a better future for your children with Yova.
Why is investing money for children so important?
Our world and society are changing ever faster and more unpredictably. Yesterday’s global players are meaningless today, and recently ridiculed start-ups are stirring up the corporate world. Tesla is a great example — a few years ago, the company was smiled at for its purely electrical approach, but today it’s one of the most valuable car manufacturers in the world.
Therefore, it’s never been as crucial as today to start investing money for children as soon as possible. After all, even a small amount can yield high returns over a long period of time, as opposed to investing money in a conventional savings account, where you end up losing your money due to the current low-interest rates and inflation. Above all, the ECB’s low-interest-rate policy has a major influence on the fact that equity investments are more profitable than a classic savings account.
The sustainability factor: Why impact investing is important
Given the uncertain future of the German labour market and the global economy in general, it’s essential to consider investing money for children wisely and correctly. However, profit is no longer the only decisive factor when it comes to investing money for children. A financial gain is worth nothing if we don’t leave our children a future worth living, and much will have to change to achieve this. The current global climate crisis proves that we must seize the chance for a profound change now. But significant social injustices, such as the discrimination of women or the payment of starvation wages in third world countries, also pose notable challenges for our society. Leave these problems unaddressed, and there will continue to be new political and social distortions in the future.
Impact investing is one of the most powerful tools when it comes to exerting a positive influence on politics and the economy. After all, as an investor in a company, you help determine the direction in which a company should develop. Furthermore, when investing money for your children in such a way, you also support companies in achieving worthwhile goals, such as providing drinkable water in the poorest countries, creating vegetable-based meat alternatives, or promoting the use of renewable energies.
This does not mean that you have to compromise on your profit because you are investing sustainably. Quite the contrary, it’s currently becoming apparent that sustainable investments are more profitable. So you are not just ensuring a better world when investing money for children with these sustainable investments, but also adding to your children’s future portfolio. According to a study by Oxford University, good sustainability practices matter for a company’s performance.
Your children’s money investment: How to do it correctly
It’s important not to treat investing as a way of “getting rich overnight”. Analyses of the stock market over the last few decades have shown that investments in shares and bonds are only worthwhile over a long period, as the relationship between investment and possible loss is too unbalanced in short-term investments.
It’s also essential to spread your investment in different dimensions such as asset types, countries, and currency, because the more diversified your investments are, the lower the risk of incurring substantial losses.
Stock market values over time
A truly sustainable money investment for children
At its core, impact investing aims to work towards a better, sustainable future for everyone while still bringing financial returns to investors. Unfortunately, because there’s financial potential for impact investing, certain companies engage in a process called greenwashing. These companies try to convince their investors that they’re acting per environmental and essential social values, sometimes using insidious PR methods to do so. However, this isn’t the case at all and often said companies are the worst offenders when it comes to harmful environmental and humanitarian practices.
Let’s look at the example of BlackRock’s iShares to better understand the problem of greenwashing. BlackRock’s iShares fund, among others, has included companies in its portfolio that produce equipment for the mining industry, due to their extremely efficient factories with very low emissions and a good carbon footprint. However, this gives rise to the question: Do you want a company that produces tools for one of the most environmentally damaging industries in the world to be in your sustainable portfolio?
To avoid greenwashing, Yova carefully checks each company before investing money for children. We undertake detailed analyses to be able to see behind the façade of a company and continuously monitor our universe to anticipate potential controversies. We make sure that every company in your portfolio is in line with the values you choose.
The right partner for investing money for your children
At Yova, all investment strategies are designed for long-term investments with diversified portfolios. Although this is considered to be the best way to achieve returns in the long run, it should be noted that no investment is without risk — there’s always a possibility of losing money.
Still, the key phrase is ‘long-term’, which is why Yova recently launched Yova for Kids, in reaction to popular demand from our customers. (As mentioned in other articles, the earlier you start investing, the better). In addition to Yova’s commitment to ensuring that all companies in a portfolio are in line with customer objectives, when it came to investments for children, several core themes were important to us:
- No hidden costs. Unlike other providers, Yova has only one fee, which is easy to understand. This means that we don’t charge for changes to your portfolio, nor for withdrawing money, nor for anything else.
- An individual strategy for each of your children. You can customise each child’s impact topics and exclusion criteria, make adjustments or withdraw at any time.
- An ideal entry into more sustainability. Investing with Yova is a fun way to introduce your children to sustainability. They’ll receive their own welcome pack and impact investing certificate.
- An easy process. To get started with sustainable investment for your children, simply login to Yova, click on ‘Yova for Kids’ and you are ready to go.
Investing money for kids: These companies are worthwhile
When investing money for children, it’s important to have a broadly diversified impact investment. All companies involved in this investment need to work on a better future, without greenwashing. But which shares are best for your children?
Companies in our universe include various tech firms, such as Alphabet Inc, the parent company of Google. Another good example is Infineon, a German company from Neubiberg, which plays a decisive role in the development of the traffic of the future. Infineon is also a leader in the field of cybersecurity, including protection against cyberattacks in the age of quantum computers. By investing in Yova, you can also invest in companies working on renewable forms of energy. Vestas, the second-largest manufacturer of wind turbines, is an excellent example.
Investing money for children: The sustainable way
Investing money for your children in a sustainable way is easy and uncomplicated with Yova. With a one-off deposit or a savings plan, you can start impact investing for the next generation. If you already have an account with Yova, you don’t need to create a new account for your child’s portfolio; you can easily add different sub-accounts to your account.
Your children’s portfolio is entirely independent of your investment, so your account remains straightforward and easy to manage. You can set themes, exclusion criteria and risk levels for your children, all from your account.
As a German customer, you can join the waitlist for Yova for Kids right now. And if you have any questions about sustainable investment for children, you can always contact us — our friendly team will be happy to assist you.